<PAGE> 1
FORM 10-KSB/A NO. 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1997
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the transition period from ____________ to ___________.
Commission File Number: 0-22390
U.S. MEDICAL SYSTEMS, INC.
(Name of Small Business Issuer in its Charter)
Delaware 68-0206382
- -------------------------------- --------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
7600 Burnet Road, Suite 350,
Austin, Texas 78757
- -------------------------------- --------------------------------
(Address of principal (Zip Code)
executive offices)
Issuer's telephone number (512) 458-3335
Securities Registered under 12(g) of the Exchange Act:
Title of Each Class
--------------------------------
Common Stock, $0.01 Par Value
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES X NO
------------- -------------
Check if there is no disclosure of delinquent filers in response to item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ X]
Issuer's revenues for most recent fiscal year: $455,000
Aggregate market value of the voting stock held by non-affiliates computed by
the closing stock price on August 19, 1997: $1,436,911
Number of shares outstanding of the issuer's Capital Stock as of November 7,
1997: 2,873,823
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PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS AND CONTROL PERSONS
The executive officers, directors and key personnel of the Company are
as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Lee Cooke 53 Chairman of the Board, Chief
Executive Officer and President
Clark A. Gunderson, M.D.(1) (2) 49 Director
Sharri McAnally 51 Director, Corporate Secretary and Controller
</TABLE>
(1) Member of the Audit Committee
(2) Member of the Compensation Committee and the Stock Option Committee
LEE COOKE has served as Chairman of the Board, President and Chief
Executive Officer of the Company since March 1992. From February 1992 through
May 1992, he served as a consultant to the investment group which acquired the
Company. He has held management positions in product manufacturing, research
and development, human resources and computer marketing for over 22 years, 11
of which were at Texas Instruments. After leaving Texas Instruments, he was a
principal in three start-up ventures: Rock, Dowell and Cooke, Inc., a
multi-store retail operation (from 1981 to 1984); Factorial Systems, Inc., a
manufacturing automation software company (from 1987 to 1988); and Habitek
International, a consulting firm to the construction and architectural industry
(from 1991 to 1992). From 1983 to 1987, Mr. Cooke was President and Chief
Executive Officer of the Greater Austin Chamber of Commerce. From 1988 to
1991, he served as Mayor of Austin, Texas. Prior to this service, he served
four years as a City of Austin council member. Mr. Cooke received his B.A.
degree in Liberal Arts from Louisiana Tech University. Mr. Cooke is a director
of Billing Concepts, Inc., a NASDAQ traded company, and an advisory director at
Tanisys Technologies, Inc., a Vancouver Stock Exchange traded company.
CLARK A. GUNDERSON, M.D. became a Director of the Company in April
1993. Dr. Gunderson is an orthopedic surgeon in Lake Charles, Louisiana, where
he has practiced since 1977. He has been a Clinical Associates Professor at
Louisiana State University School of Medicine, and has served as the Chief of
Surgery at Lake Charles Memorial Hospital, where he is currently President of
the medical staff. Dr. Gunderson received his M.D. from the Baylor College of
Medicine in 1973.
SHARRI MCANALLY joined the Company in November 1992 as Controller and
became a director in 1996. In August 1994, the Board of Directors appointed
her Corporate Secretary. From 1989 to 1992 she served Mission Cable Co. as
Assistant Controller. Currently, she is Assistant Controller for VTEL, Inc. a
video conferencing company.
1
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ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth information in respect to the
compensation of the Chief Executive Officer. Mr. Cooke became an employee of
the Company during fiscal 1993 and did not receive perquisites exceeding 10% of
his salary and bonus in 1995, 1996 or 1997. No executive officer of the
Company received salary and bonus exceeding $100,000 in fiscal 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Fiscal
Name and Principal Position Year Salary Bonus
--------------------------- ---- ------ -----
<S> <C> <C> <C>
Lee Cooke, Chairman, President 1997 $76,729 None
and Chief Executive Officer 1996 $111,500 None
1995 $ 81,000 None
</TABLE>
STOCK OPTIONS
In fiscal 1994, the Shareholders approved the 1993 Stock Plan. Prior to
the adoption of this Plan the Company made certain option grants that were
individually approved by the Shareholders. In February 1994, the 1993 Plan
Administrator approved option grants totaling 930,000 shares to employees and
directors; however, these option grants were not issued until after receiving
the requisite approval of the Vancouver Stock Exchange, subsequent to year end.
All of such options issued were canceled as part of the Reorganization Plan and
378,180 options for employees, directors or key outsiders were issued February
7, 1997 consistent with the new capital structure. Currently, the Company's
issuance of stock options can not exceed 20% of the issued and outstanding
Common Stock as set by the Vancouver Stock Exchange.
OPTION GRANTS IN 1997 FISCAL YEAR
<TABLE>
<CAPTION>
No. of
Securities % of Total
Underlying Options Potential Realizable Value at Assumed
Options Granted to Exercise Expiration Annual Rates of Stock Price
Name Granted Employees Price Date Appreciation for Option Term
5% 10%
<S> <C> <C> <C> <C> <C> <C>
Lee Cooke 143,359 100% $0.60 2/7/02 $4,300 $8,600
</TABLE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND OPTION VALUES AT JUNE 30, 1997
<TABLE>
<CAPTION>
Number of Value of Unexercised In-the
Unexercised Options Money Options at
Number of Securities Value At June 30, 1997 June 30, 1997
Name Acquired on Exercise Realized Exercisable Exercisable/Unexercisable
---- -------------------- -------- ----------- -------------------------
<S> <C> <C> <C> <C>
Lee Cooke 0 -- 143,539 0 / 0
</TABLE>
2
<PAGE> 4
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Mr.
Cooke. This agreement provides for a minimum annual base salary (subject to
adjustment) of $110,000. Mr. Cooke's current annual salary is $79,800 due to
two voluntary reductions made by Mr. Cooke on July 11, 1994 and March 1, 1995.
The employment agreement expires August 27, 1999 and provides that in the event
of termination without cause, Mr. Cooke is entitled to two years of severance
pay. The Board of Directors has approved a two-year extension of the current
agreement.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, AND
MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of November 7, 1997 for (i) each
person known by the Company to own more than five percent (5%) of the Common
Stock; (ii) each director and the executive officers of the Company, and (iii)
all directors and all executive officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
-------------------- ----------
Name and Address of Beneficial Owner Beneficial Ownership(1) Class
- ------------------------------------ -------------------- -----
<S> <C> <C>
Clark A. Gunderson, M.D.(2) 316,635(3) 10.8%
Lee Cooke(2) 311,202(4) 10.4%
Sharri McAnally(2) 29,285(5) *
All executive officers and directors
as a group (3 individuals) 657,122(6) 21.4%
</TABLE>
*Less than 1%
(1) The persons named in the table have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially
owned by them, subject to community property laws where applicable and
the information contained in this table and these notes. Percentage
is based on 2,873,823 shares outstanding
(2) The address of the executive officers and directors of the
Company is 7600 Burnet Road, Suite 350, Austin, TX 78757.
(3) Includes 2,857 shares of a children's educational account; 19,047
shares purchasable within 60 days at a price of $0.60 per share
pursuant to stock options exercisable until February 7, 2002.
Includes 125,350 shares provided in forgiveness of $84,150 principle
debt and $11,921 interest. Includes 35,000 shares purchasable within
60 days at a price of $0.75 per share pursuant to a warrant that
expires January 31, 1998.
(4) Includes 94,989 shares purchasable within 60 days at a price of
$0.60 per share pursuant to stock options exercisable until February
7, 2002. Includes 73,735 shares provided in forgiveness of $49,000 of
principle debt and $7,012 in interest. Includes 25,500 shares
purchasable within 60 days at a price of $0.75 per share pursuant to a
warrant that expires January 31, 1998.
(5) Includes 15,952 shares purchasable within 60 days at a price of
$0.60 per share pursuant to stock options exercisable until February
7, 2002.
(6) Includes 129,988 shares purchasable within 60 days a price of
$0.60 per share pursuant to stock options exercisable until February
7, 2002. Includes 60,5000 shares purchasable within 60 days at a
price of $0.75 per share pursuant to a warrant that expires January
31, 1998.
3
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ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In the Reorganization Plan, Clark A. Gunderson, M.D., director,
received 125,350 shares of the Company's Common Stock in exchange for
principle and interest due him. Lee Cooke, Chairman and President, received
73,735 shares of the Company's Common Stock for principle and interest due him.
4
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
U.S. MEDICAL SYSTEMS, INC.
THE REGISTRANT
/s/ LEE COOKE
----------------------------------------
Lee Cooke
Chairman of the Board, President and
Chief Executive Officer
Date: November 11, 1997
5
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INDEX TO EXHIBITS
EX-27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-1-1996
<PERIOD-END> JUN-30-1997
<CASH> 275,000
<SECURITIES> 0
<RECEIVABLES> 16,000
<ALLOWANCES> 5,000
<INVENTORY> 59,000
<CURRENT-ASSETS> 355,000
<PP&E> 16,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 371,000
<CURRENT-LIABILITIES> 110,000
<BONDS> 0
0
0
<COMMON> 29,000
<OTHER-SE> 261,000
<TOTAL-LIABILITY-AND-EQUITY> 371,000
<SALES> 455,000
<TOTAL-REVENUES> 0
<CGS> 225,000
<TOTAL-COSTS> 486,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5,000
<INTEREST-EXPENSE> 33,000
<INCOME-PRETAX> (273,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (273,000)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> 0
</TABLE>
